DoorDash Partners with Klarna for Buy Now, Pay Later Service
In a significant step towards revolutionizing payment options for food delivery, DoorDash has announced a new partnership with the fintech company Klarna. This collaboration will allow DoorDash customers to utilize buy now, pay later (BNPL) services, enhancing flexibility in payment choices.
Flexible Payment Options for Consumers
Customers using the DoorDash app will benefit from a range of payment options. They can choose to pay in full, split their payments into four equal installments, or defer payment to a later date that better aligns with their financial situation, such as a time coinciding with their paycheck. This feature is intended to provide consumers with more control over their spending.
Growing Popularity of BNPL Services
The growth of BNPL services reflects a wider trend in consumer finance. Several major retailers, including Grubhub and Walmart, have already introduced similar payment schemes, catering to a growing demographic of cautious consumers. Recent data from the New York Federal Reserve indicates that economic uncertainties have led many Americans to hesitate when applying for traditional credit options, such as credit cards and loans, making BNPL services increasingly attractive.
As of February, 8.5% of borrowers reported being discouraged from seeking credit due to fears of rejection, marking the highest level since 2013. This factor highlights the demand for alternative payment solutions like BNPL.
Consumer Considerations and Regulatory Oversight
Despite the benefits, experts urge caution regarding the potential pitfalls of BNPL services. Consumer Reports, among other watchdog organizations, has raised concerns about high interest rates and associated fees that may be hidden within the loans. The Consumer Financial Protection Bureau has also taken notice, issuing regulatory actions in response to complaints about BNPL practices.
Klarna has defended its approach, asserting that it avoids charging interest on its loans. Instead, the company relies on timely payments from customers. In fact, Klarna reports that 99% of its loans are repaid, with an average user owing around $100.
Klarna’s Expansion and Future Plans
This partnership with DoorDash signifies a key moment in Klarna’s strategy to expand into daily spending categories. As Klarna heads toward preparing for an initial public offering (IPO), it continues to solidify its presence in the consumer market. Founded in 2005, Klarna now collaborates with 675,000 merchants across 26 countries, making it a formidable player in the fintech landscape.
